Uber Sued by FTC Over Unauthorized Subscription Charges
Uber is under fire as the Federal Trade Commission (FTC) has filed a lawsuit against the ride-hailing giant. The core of the complaint revolves around allegations that Uber charged customers for its Uber One subscription service without obtaining proper consent. The FTC also contends that Uber failed to deliver the savings it promised to subscribers and created an unreasonably complex process for users attempting to cancel their subscriptions, despite advertising a "cancel anytime" policy.
The FTC's action follows increased scrutiny of subscription service practices. The agency, under its previous director, Lina Khan, has been pushing for companies to simplify the cancellation process. This culminated in the "click to cancel" rule, finalized in October 2024, which mandates that companies make subscription cancellations as easy as signing up. This rule is slated to take effect on May 14.
Key Allegations Against Uber
According to the FTC's complaint, which stemmed from an investigation initiated last year, Uber misled customers by promising monthly savings of $25. However, the FTC argues that Uber did not factor in the subscription cost ($9.99/month) when calculating these savings. Furthermore, the FTC claims that Uber obscured important subscription details, using subtle text that consumers could easily overlook.
Another allegation is that Uber automatically charged consumers who signed up for a free trial before their actual billing date. The cancellation process is also under scrutiny. The FTC claims that Uber made it exceptionally difficult for customers to cancel their subscriptions, requiring them to navigate through numerous screens and actions.
Some users report being directed to customer support without any means of contacting them. There are also claims that Uber charged users for another billing cycle even after they requested cancellation and were awaiting a response from customer support.
Uber's Response
Uber denies any wrongdoing. An Uber spokesperson stated that the company's sign-up and cancellation processes for Uber One are "clear, simple, and follow the letter and spirit of the law." Uber asserts that it does not sign up or charge consumers without their consent and that cancellations can be done in-app in a matter of seconds.
Uber also clarified that a previous policy requiring customers to contact customer support to cancel within 48 hours of signing up has been updated, and now cancellation can be done via the app.
Former FTC chair Tim Muris, who represented Uber during the investigation, accused the FTC of conducting an incomplete investigation and basing its complaint on misunderstandings of facts and law.
The Stakes
The FTC is seeking a court order to prevent Uber from continuing its alleged deceptive practices and to compel the company to provide monetary relief to affected customers. With Uber One's membership base reaching 30 million across 34 countries and growing rapidly, the outcome of this lawsuit could have significant implications for the company.
Source: TechCrunch